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Startup shuns VC investment, crowd-funds £500,000 in a week

London-based startup Escape the City has turned down two offers of venture capital financing in favour of crowdfunding, and has raised almost £500,000 in a week.

Escape the City is a website that helps professionals to make career transitions. It has a community of more than 65,000 people who want to escape from unfulfilling corporate jobs -- be it launching a startup or joining a quirky company or non-profit organisation.

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The company was founded by Dom Jackman and Rob Symington, who quit their management consultancy jobs in order to set up the business. Given that "leaving the city" was part of the company's philosophy, they were reluctant to have to rely on the city for financing.

Jackman told Wired.co.uk: "When it came down to financing, it really grated on us that we had to go back to the city."

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Despite this, they initially went down the corporate route and secured two separate offers from "good VCs". Through speaking to some of their members they realised there was the appetite for them to get involved in the business. This gave them the confidence to turn down the offers from the VCs and go for the crowdfunding model using Crowdcube.

They set up a private Crowdcube page to raise £500,000 (500,000 shares costing £1) in return for a 20 percent stake of the company on Thursday 24 May, and sent the link to the Escape the City community. Within a week they raised 90 percent of their target -- hovering at around £450,000 (given by more than 300 investors) at the time of writing. "It's humbling that our members share our vision and believe so much in what we are doing and what we plan to do," Jackman added.

Crowdfunding is extremely popular for pre-ordering products, as demonstrated by platforms like Kickstarter, but is a relatively new model for investment in startups.

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Jackman says that the funds will be used to pivot the company, to create an "aspirational alternative to a LinkedIn profile", shifting from being a site that focuses on content to one that focuses on networking. Meatspace networking is already a popular feature of the site thanks to integration with events-planning tool

Meetup. The idea is to build a platform that allows people to "plan their escape" by expressing what they want from their career and connect them with the organisations that can make that happen. Escape the City will than charge for premium user accounts, organisation pages and job listings. All three of these revenue streams have already shown signs of success on the existing platform.

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In order to make this shift, the site will close down for four weeks of development before relaunching, perhaps even with a new name. "Internationally, The City doesn't have the same connotations. In New York they thought it was a travel site -- there, The City is Wall Street," said Jackman.

Escape the City is likely to hit £500,000 on 1 June, and may extend the round to raise up to £700,000.